Italy recovered €12.7 billion from tax evasion in 2011, up 15.5 per cent from the amount it retrieved in 2010 after stepped up surveillance and collection efforts, the main tax collection agency said today.

The struggle against tax evaders has taken high prominence in recent months after prime minister Mario Monti took over from Silvio Berlusconi in November and launched a series of measures aimed at bringing Italy's huge public debt under control.

However most of the money was recovered under Mr Berlusconi's government, which also pledged a crackdown on tax evasion to help plug the budget deficit.

Tax evasion is a longstanding problem in Italy, estimated to cost the state as much as €120 billion a year in lost revenue, and is one of the areas where economists say the country must change if it is to deal with its debt crisis.

Tax inspectors have carried out several successful raids, swooping on a posh ski resort in December and catching 42 drivers of Ferraris and other luxury cars who had declared annual incomes of less than €30,000.

Police have also descended on nightclubs and bars in Milan and shops in Rome where fewer than half were issuing proper receipts.

Reuters